Confusion In Korea: Ministry Of Finance Refuses To Support Cryptocurrency Trading Ban

Overnight, Bitcoin and the entire crypto sector took a major beating, falling as much as 11% after South Korea - one of the crytocurrency’s biggest markets - said it was drawing up laws to ban cryptocurrency trading. Specifically, South Korea's Ministry of Justice reaffirmed that it is continuing to draft its cryptocurrency trading closure bill, which has been in the works since December 13. In a statement, South Korea Attorney General Park Sang-ki said:

“The South Korean Ministry of Justice is considering the closure of cryptocurrency trading to bring cryptocurrency mania and speculation under control for investor protection.”

This was in line with previous reports out of the country according to which the South Korean government formed a task force composed of representatives from the South Korean Ministry of Strategy and Finance, Financial Services Commission, Ministry of Justice, Fair Trade Commission, and Financial Supervisory Commission, has been preparing a comprehensive bill that will effectively prohibit underaged investors and foreigners from trading cryptocurrencies within the South Korean market, and will force all traders to trade under their real names to avoid money laundering.

However, where things get interesting is that in the hours after the surprise announcement by the Justice Ministry, South Korea's Ministry of Strategy and Finance, a key member of the crypto task force, said that it does not agree with the "premature statement of the Ministry of Justice about a potential cryptocurrency trading ban."

In a press conference, the South Korean Ministry of Strategy and Finance told local reporters  that it had first heard of the Ministry of Justice’s cryptocurrency trading ban through media reports. The cryptocurrency task force participated by the central bank, MInistry of Finance, Ministry of Justice, and other agencies have not agreed upon the proposal.

We do not share the same views as the Ministry of Justice on a potential cryptocurrency exchange ban,” MSF said according to the local Naver website.

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Kim Dong-yeon, Minister of Finance and Economy of the Ministry of Economy and Finance

More from Naver, Google translated:

Many executives are embarrassed. It was not until I saw the news that I had encountered the policy of closing. An official at the Ministry of Finance said, "I did not know the announcement of the Justice Department to close the virtual money exchange after the advance notice," he said. Another official said, "The field of virtual money such as bit coin should be deregulated into an area where Korea has advantages, like online games, and the government should directly raise the industry."

Which is understandable for a nation in which millions of "bitcoin zombies" have made bitcoin trading their primary source of income.

There appears to also be a political element to the decision, and as Hani reported  this morning, opposition parties such as the right-wing people's party and the people's opposition parties, have voiced criticism saying "there should be a detailed review and coordination" and "we should prepare measures instead of crackdowns" in response to the statement by the Justice minister. Additionally, a spokesman for the Dongbang Party criticized the government's decision saying "the announcement of the government's closing of the virtual currency exchange is, in a word, hurting the nation... alot of people's property has evaporated." He also said that president Moon Jae-in "should apologize to the people and take appropriate measures."

Evidently, the cryptocurrency trading ban proposal has not been finalized or even agreed upon by the South Korea Ministry of Strategy and Finance.

Finally, CCN reporter Joseph Young reports that in an official announcement, "South Korean government reaffirms there will be NO TRADING BAN for #cryptocurrency market in the short term and NOTHING IS FINALIZED."

Furthermore, a petition to fire the head of the Ministry of Justice over the #cryptocurrency trading fiasco filed.

In summary, it appears that the local Ministry of Justice may have jumped the shark with the cryptocurrency ban announcement, and it remains to be seen if this decision receives the government support it would need in order to pass even as a potential crypto-ban is increasingly becoming a highly politicized issue for a nation where cryptotrading has become one of the population's favorite pastimes.